Exam 2: Analysis of Financial Statements

The Securities and Exchange Commission (SEC) allowed publicly traded foreign companies to use the International Financial Reporting Standards (IFRS) rather than the Generally Accepted Accounting Principles (GAAP).

Selzer Inc. sells all of its merchandise on credit. It has a profit margin of 4 percent, days sales outstanding equal to 60 days, receivables of $150,000, total assets of $3 million, and a debt ratio of 0.64. The firm's return on equity (ROE) is:

The net fixed assets of Auburn Media Ltd. is $850 million. The sales of the firm is $1,420 million. The firm's fixed assets turnover ratio is:

In which order will assets be listed in a balance sheet?

Which of the following accounts contains the actual money that can be spent by a firm?

Which of the following is an example of a firm's long-term debt?

Which of the following is considered as a liability in the balance sheet of a firm?

Which of the following is an example of a noncash item reported in the income statement of a firm?

The degree to which the managers of a firm attempt to magnify the returns to owners' capital through the use of financial leverage is captured in debt management ratios.

Which of the following statements shows the portion of the firm's earnings that has been saved rather than paid out as dividends?

A decline in the inventory turnover ratio suggests that the firm's liquidity position is improving.

Bicksler Corporation has a current ratio of 2.0 on 21st July. On 22nd July, Bicksler purchased (and received) raw materials on credit from its supplier. Assuming all other things are equal, how will this transaction affect the current ratio of Bicksler?

Which of the following is an example of a current asset?

Which of the following information in an annual report describes the firm's performance during the past year and also provides information regarding new developments that will affect future performance of the firm?

A firm obtains the funds needed to pay its current bills from its:

Techniques employed by firms to make their financial statements look better than they actually are, are called:

An inventory turnover ratio of 8.5 times indicates that:

Sapphire Industries Ltd. has a net income of $60 million and the total depreciation on its assets is $20 million. The net cash flow of Sapphire Industries is:

Which of the following transactions will not affect the quick ratio of a company?

Pearl Automotive Ltd. has a current ratio of 2. The company wants to window dress its financial statements. Which of the following transactions will increase the current ratio of Pearl Automotive, assuming all other variables remain constant?